CASE STUDY 2: PERFORMANCE MANAGEMENT SYSTEM

TO DO OR NOT TO DO

The Novelty Toy Company is a non-union shop with 200 employees. The company
makes mechanical, battery-driven toys. Later new orders have been pouring in,
creating a need for more skilled workers. The management knows that the labor
market is tight has been finding it difficult to recruit new, skilled employees.

Phil Aragon supervises the motor assembly section where the battery-driven
mechanisms are put together. As new orders move Phil is having trouble meeting
production schedules.

Of the ten workers under Phil, four are vital. One of them is Tony Ruiz. One
morning Tony came up to Phil, fidgeting with his work gloves. After an
uncomfortable pause, Tory said, ‘The Carley Toy Company wants to hire me at a
much higher salary than I am receiving now. If I say 'yes,' I've got to start right
away.’ Tony hesitated and then went on, "I like Novelty. I don't want to leave. But
I need the extra cash. If you'll give me a raise I’ll change my mind."

Phil said, "Wait here. I'll be back. I want to talk to Mr. Valdez

Phil hurried to superior's office. He outline the ultimatum laid down by Tony.
Then he added, “Tony is due for a raise at his next evaluation four months from
now. Personally, I don't think we can give the raise to him now. It's not fair to the
others. They're just as good as Tony, and a few are even better. Raise have always
been granted according to a fixed schedule."

Mr. Valdez analyzed the situation. Then he said. "Give him the raise he wanted,
and tell him not to tell anybody about it."

Tony agreed to stay on when Phil told him of Mr. Valdez's decision.

Several days later, Dick Alvaro, one of Phil's workers, came up to Phil. He was
mad. "Why does Tony get a raise and I don’t?” I've worked here as long as he has.
Our jobs are the same. Up to now I've matched his raises. And I make out the SD-
2 forms, not him. I'm going to spread this all over the shop if I don't get a raise as
high as his. There's going to be trouble if this leaks out."

Desperation tinged Phil's hurried reply. "Don't say anything to anybody, I'll see
you in a little while. First I've got to talk to Mr. Valdes

On his way to Mr. Valdez's office Phil detoured to the shop towards Tony's
workbench. Now it was his turn to be mad. “How did Dick find out about your
raise?" he asked Tony.

Employee Appraisal and Wage Administration

Tony responded, "We went bowling last night. In between games, we were
talking. It just slipped out."

What action should Mr. Valdez take? : (1) Fire Tony? (2) Give Dick the same
raise as Tony and tell each of them that both will be fired if either tells anyone
about the raises? (3) Advance everyone's evaluation time and give raises to the
deserving (4) Do nothing?